Mastercard will no longer issue Maestro cards from mid-2023. This announcement has caused unrest not only in Germany. Industry experts fear significantly higher fees from the switch to the debit Mastercard - and also an increasing dependence on US financial service providers. What is in store for the wine trade?
The Maestro card with the red-blue circles is a debit card of the credit card company Mastercard. It supplements the bank cards that can usually only be used in one's own country with use abroad. For this purpose, the credit card company Eurocard, based in Brussels, and the US financial group Mastercard had already jointly introduced the Maestro debit card in 1991. At that time, Eurocard issued guarantee cards for payment with Eurocheques. Mastercard, on the other hand, supplied the technology for digital card payments. This resulted in the ec card, which was popular for many years. The strategic alliance of both providers made it possible to charge the payment amount directly to the customer's account - unlike with a credit card - even for international payments.
But the Eurocheque system, which was still based on paper, became obsolete with the spread of PCs and the Internet, which is why it was discontinued at the end of 2001. During this time, the European banks failed to also establish a digital payment system with the introduction of the euro on 1 January 2002. Instead, Mastercard bought the two European competitors Eurocard and Maestro - and established them as independent brands.
The term ec-Karte has been continued in Germany with the meaning "electronic cash", but it only means a bank card that can be used in Germany. The term "Girocard", which was introduced in 2007, has not yet become established in everyday life. So that girocards can also be used abroad, they are usually equipped with the Maestro function - or with the system of the competitor Visa: "V Pay".
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Maestro and "V Pay" are accepted by most card terminals (point of sale = POS) in shops and shops, but often not for online payments. Even paying with new mobile terminals (mPOS) or depositing card data in Apple Pay or Google Pay does not always work. These limitations are the reason for Mastercard to now exit Maestro and rely on the technologically advanced Debit MasterCard. Melissa Walker, press spokesperson for Visa Germany, on the other hand, explains on request that "V Pay" is "fully supported so that cardholders can continue to use it to pay in retail". However, the decision on which cards to issue lies with the banks. They are currently "increasingly offering Visa Debit". Despite the statement, many financial experts have long assumed that "V Pay" could also soon be terminated by Visa.
For wine merchants who expanded their online business during the pandemic, started their web shop in the first place or want to switch to mPOS terminals, the change should indeed simplify payment processing. But that is only one aspect: experts in digital payment systems currently assume that the expanded functions will also mean significantly higher costs for retailers.
Their fears can be substantiated by developments in Switzerland: There, the introduction of Debit Mastercard and Visa Debit in spring 2021 has caused an uproar among Swiss retailers: Six, a provider belonging to the French payment service provider Worldline, has set transaction fees at around half a per cent of turnover for Debit Mastercard and even almost a whole per cent for Visa Debit and "V Pay". For higher amounts, this is a multiple of the previous flat rate of 26 centimes per Maestro transaction. Calculated over the course of a year, this can add up to several thousand francs - and without any recognisable additional benefit for the merchants. Their protests have prompted the Swiss price supervisor, who intervenes on the basis of the law in the case of abuse by companies with market power, to become active. Its officials have negotiated an "amicable settlement" with Six: Since 1 May 2021, the fees per transaction are capped at a maximum of 3.50 francs for Visa Debit and "V Pay" and a maximum of two francs for Debit MasterCard.
That is nevertheless much more than previously with Maestro. Now merchants and customers are asking themselves why retailers should pay such high fees, to whom the money is going - and whether such a massive increase is now also imminent in Germany. But there are hardly any concrete answers from the industry to the questions posed by wein.plus. Even at the framework contract partner of wein.plus, the leading payment service provider in Germany PayOne - which belongs to Worldline and the Sparkasse group - the experts were surprised by the Maestro exit: "Since the topic is very new, we don't have it on the agenda yet," said their Association Manager Klaus Klein.
Mastercard is trying to explain the complex way card payments work, but does not yet want to comment on fees and details, explained Juliane Schmitz-Engels, Head of Communications Germany and Switzerland. In June 2021, Visa tried to smooth the waters in Switzerland with a little more transparency. Both providers emphasise that the fees are negotiated between merchants and banks - and refer to the interchange fees from which Mastercard and Visa themselves do not benefit. However, this fee has been capped at a maximum of 0.2 per cent of turnover by an EU regulation since 2015.
However, the German Retail Association (HDE - umbrella organisation of the German retail trade) criticises in a position paper of January 2021 that new, at least strange, even invented fees are always being charged for this. These would always be set by the respective card issuer and passed on to the merchants via the banks. The HDE therefore demands the extension of the interbank fee regulation to all components of the merchant fee - and much more transparency about its composition.
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An EU-wide regulation therefore seems to be urgently needed. For there is much evidence that in countries where the introduction of Debit Mastercard and Visa Debit is already further advanced, the merchant fees have risen drastically. In Italy, for example, all debit cards are charged up to four percent, which is much higher than in Germany at present.
The European Payments Initiative (EPI) is intended to remedy this situation. With the project launched in summer 2020, 31 European banks want to make up for what was neglected 20 years ago and establish a Europe-wide digital payment system. Two important payment service providers, Worldline and Nets, are also on board. According to the industry service "Der Treasurer", not only contactless debit and credit cards will be issued, but also a smartphone app for real-time transfers between private individuals will be developed. At present, those responsible at EPI are optimistic about the board's decision on the future corporate structure, which is scheduled for the end of November 2021. The public is to be informed at the beginning of December. Merchants can therefore be curious to see whether the European solution for digital payments will be in place by 2024 as planned, whether it will actually simplify payment for customers and merchants alike - and, above all, whether it will reduce costs again.